On August 12, the Consumer Financial Protection Bureau (CFPB) submitted a comment letter in response to a Treasury Department Request for Information on the use of AI in financial services.

Why Is It Important?

Reiterating that “there is no ‘fancy new technology’ carveout to existing consumer financial laws,” the CFPB has emphasized that products and services built with innovative technologies must conform with consumer protection laws and regulations, including the Equal Credit Opportunity Act (ECOA), and Unfair, Deceptive, or Abusive Acts or Practices (UDAAP), in both origination and servicing practices.

The CFPB’s comments underscore the sustained regulatory focus on the use of emerging technologies, and the goal of responsible innovation balanced with consumer protection.  The CFPB has made clear that companies must comply with consumer financial protection laws when adopting emerging technology, stating, “[i]f firms cannot manage using a new technology in a lawful way, then they should not use the technology.”

The comment letter emphasizes the CFPB’s focus on the growing use of emerging and innovative technologies in consumer financial services, including machine learning, “traditional” forms of artificial intelligence, and generative artificial intelligence.  As the CFPB balances support for innovation in the consumer space, it is clear that it has set its sights squarely on how those technologies are used, and what the consumer impact may be.

What To Do Now?

Companies using (or considering using) emerging technologies should have clear governance mechanisms to ensure alignment between business priorities and appropriate risk management practices, including where vendors are engaged to provide innovative technology solutions.  There is no one size fits all model, however, and the use case for the technology will drive the primary risk analysis.  As use of emerging technologies continues to expand, ensuring stakeholder involvement and alignment should be a top priority.



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